HONG KONG, Feb 11 (Reuters) - Global hedge funds have

been snapping up Chinese stocks for much of this year, with

their buying accelerating in the past week as the emergence of

homegrown artificial intelligence startup DeepSeek fueled

investor enthusiasm, Goldman Sachs ( GS ) said in a note.

Onshore and offshore Chinese equities combined are by far

the "most notionally net bought market" on Goldman Sachs' ( GS ) prime

brokerage book across the world, the bank said in a note to

clients citing data until February 7, seen by Reuters this week.

The week between February 3 and 7 recorded the strongest

purchase by hedge funds in over four months, the bank said.

Bank prime brokerage desks lend to hedge funds and see their

trading flows.

DeepSeek's breakthrough low-cost AI model has become a

catalyst for the revaluation of Chinese assets among global

investors that are already worried about the peaking valuation

of U.S. stocks.

DeepSeek is reversing the narrative of "China is irrelevant

on AI and is losing the AI war," said a Hong Kong-based

institutional sales director who serves hedge fund clients.

Sentiment was supported by Beijing's policy-easing measures

and relief that U.S. President Donald Trump's latest 10%

additional tariff on Chinese goods was lower than he initially

threatened, analysts and investors said.

The MSCI China index is up for four

consecutive weeks since mid-January and more than 6% so far in

February, outperforming the world's major markets.

Billionaire David Tepper's Appaloosa LP significantly raised

its stakes in Chinese internet giants Alibaba Group ( BABA ) and

JD.Com ( JD ) during the fourth quarter, according to a

securities filing this week, making both firms one of his hedge

fund's largest positions.

Goldman Sachs ( GS ) said 95% of the buying last week was in single

stocks, led by sectors including consumer discretionary,

information technology, industrials and communication services.

Energy, utilities, and real estate were dumped by hedge

funds during the period.

Hedge funds' allocation to Chinese equities now stands at

7.6% of Goldman Sachs' ( GS ) total prime book exposure, ranking in the

23th percentile in the past five years, up from roughly 10th in

January.